With the growing gap between promised public pensions and what cities have been able to afford since the recession; the explosion of special districts, raising federal questions about what constitutes a city or municipality; and the largest municipal bankruptcies in American history, 2014 was a year of reckoning for city leaders. Such reckoning has led naturally to the key question: are states and local governments on a fiscally sustainable path?

 

With a special focus on the fiscal upheavals in Stockton, California, and Detroit, Michigan, this article reviews the key issues at the heart of this question—issues with complex federalism implications that not only cut across the country’s three levels of government but also raise profound constitutional questions regarding whether federal laws may preempt state constitutions and supersede municipal authority to address financial obligations.

 

This e-document is an article included in The Municipal Year Book 2015.